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China’s industrial profits rose the most in three years in August

THE growth of profits made by China's industrial firms jumped the most in three years in August due to a low base, rising sales and lower costs, official data showed. The release completing a string of August data that had shown signals of stabilized economic activities.

Industrial earnings last month surged 19.5 percent to 534.8 billion yuan (US$80.2 billion) with auto, steel performed the best, the National Bureau of Statistics (NBS) said. It posted the fastest monthly rate since 2013. July's growth was 11 percent.

Industrial sales gained 6.3 percent in the month year-on-year, pricing rebounded higher by 0.9 percent from July, and the cost per million yuan revenue decreased for a third month to 86.14 yuan.

By sectors, auto and steel performed best, with manufacturing profits rose 14.1 percent from January to August, while foreign corporations also added 10 percent from a year earlier.

Mining industry profits fell sharply by 70.9 percent during the period.

"The fast pace of growing profits last month was largely because of a lower profit base from a year ago, " said He Ping, official of NBS industry division, in a separate statement.

"We have to confront the fact that the fundamentals to support a sustained industrial profit growth is still fragile,  both domestic and overseas demands are weak, and the time it takes companies to get paid money they’re owed remains relatively long," He said, adding that traditional industries will continue to struggle, particularly in sectors suffering from overcapacity.

Propped up by a property market boom and government spending, the world's second-largest economy has shown recent signs of stabilization as new credit, industrial output, fixed-asset investment and retail sales picked up and beat analysts’ estimates in August.

Shenwan Hongyuan Securities Co raised the full year forecast of industrial profit to 8 percent in a note today, and remained its call for a relatively easing fiscal and monetary environment.

Though economists argue that government stimulus may weaken due to a renewed focus on the supply-side reform, and a tightening regulation over the housing purchasing frenzy will forged a bigger bubble and place the market under risks.


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